Is China Responsible for World Economic Imbalances?

The only concept that justifies free trade is that currency exchange rates are also supposed to automatically adjust so that every nation has an equal opportunity to manufacture and sell their products.

China pegs their currency to the US dollar, thus defeating free trade. They peg the currency by spending the money from the free trade of automobiles and electronics on TBills and other American securities. You can verify this by looking at the exchange rates over the years; they haven’t changed by even 1%.

Plausibly, their communistic nation can control and suppress the wages of their workers. That, coupled with the control of the exchange rates, effectively controls the wages of Americans engaged in manufacturing.

Plausibly it is the fact that this country is faltering is because the wealthiest 20% own more than 80% of the wealth of this nation while the poorest 80% own less than 20% of the wealth. Historically when the poorest 80% own less than 20% of the wealth, we have a recession.

Why? Obviously that if one person had all the wealth, there would be no trade and little flow of money as nobody would have anything to give the person with all the wealth. While this is a deliberate exaggeration, it shows a probable reason for wanting the poorest 80% to have more wealth. Calculus would show that the optimum amount of trade would happen if everybody had the same wealth.

It seems that China’s suppression of free trade, prices and exchange rates has disrupted the balance of wealth and has pushed the world economy into recession. What do you think?